Verizon Communications Mergers and Acquisitions Essay
Verizon Communications Mergers and Acquisitions
Verizon Wireless and Vodafone
Vodafone Is a British telecommunications company headquartered in London. It is the world’s second largest mobile communications company with a total of 420 million wireless subscribers as of January 2014. Vodafone owns and operates networks in 21 countries and has partner networks in over 40 countries.
Verizon Wireless, formerly known as Cellco Partnership, is now branded as Verizon. Originally founded in 2000 as a joint venture of Verizon and Vodafone, Verizon Wireless reported $81 billion in operating revenues in 2013. Today Verizon provides wireless services to 122 million subscribers as of Q1 2014. On 2/21/2014 Verizon completed its acquisition of Vodafone’s 45% indirect interest in Verizon Wireless for $130 billion. “This is a great day for Verizon,” said Lowell McAdam, Verizon chairman and CEO. “The new Verizon now has full ownership of the U.S. wireless industry leader in network performance, profitability and cash flow. Acquiring Vodafone’s stake in Verizon Wireless will provide financial flexibility, enhanced operational efficiency and innovations that will benefit customers.”
Both Vodafone and Verizon Wireless have grown massively over the last decade. Yet, despite all the success, both companies struggled to find an approach to go to market together. It seemed that Vodafone’s relationship with Verizon Wireless was no more than an equity interest as a silent partner. In addition, Vodafone and Verizon Wireless have incompatible technologies, whereas Vodafone uses GSM and Verizon invested in CDMA/LTE networks. So when a Vodafone user was in the U.S., they were not even able to roam on Verizon Wireless’s network due the incompatibility of wireless technologies.
In 2004 the relationships between the two companies reached a low point as a direct result of Vodafone making public announcements to acquire AT&T Wireless. Once Cingular beat them out, Vodafone was put in a awkward situation and had to find a way to improve their relationship with Verizon, most importantly, how to integrate wireless services.
Verizon Communications Inc., based in New York and incorporated in Delaware, was formed on June 30, 2000, with the merger of Bell Atlantic Corp. and GTE crop. The mergers that formed Verizon were among the largest in U.S. history, with a total of $58 billion in combined revenues. On Sep. 21, 1999, Bell Atlantic and London-based Vodafone AirTouch announced a new wireless business with one national footprint under a single brand and common digital technology. The new Verizon brand was launched on April 3, 2000, with the new wireless joint venture effective April 4 under the name Verizon Wireless, with Vodafone controlling 45% and Verizon Communications as the majority 55% owner, with full management control as the nations largest wireless carrier.
Verizon offers services in wireline, wireless and internet communications services; information services, and HDTV satellite television options through Direct TV. Verizon promotes its services through their television advertisements, corporate sales team, retail locations, website, customer service call centers, mass mailing, and many other forms. Their marketing strategy goes beyond the U.S, and reaches places North America, Latin America, Europe, and Asia
Verizon Enterprise Solutions (VES)
VES is a unit of Verizon Communications. They provide enterprise communications, managed network, and IT services to businesses, as well as state and federal government clients. VES specializes in voice and data communications, network operations management, network security management, wholesale network access, and teleconferencing. It serves customers in 140 countries, including nearly all of the Fortune 500.
With the acquisition of Vodafone’s 45% stake in Verizon Wireless, a new wireless strategy was put together in Q1 2013. Individuals from Verizon Wireless were moved up to VES to service Verizon customers with both wireless and wireline services. This move also made it possible to further integrate products and streamline business models from all divisions – Wireless, Wireline, Terremark, Emerging Technology, and Professional Services.
Integration of Products/Services
For the past few years Wireless and Wireline worked independently from each other, and in some cases competed. As a result, contracts and/or pricing was not competitive enough. Competitors such as AT&T were already offering bundled pricing for both wireless and wireline. With the introduction of VES Wireless, the product/service offerings now cross over, making it possible to maximize revenues. New list of offerings include – Wireless Backup, application hosting in the cloud, machine to machine technology, telematics, and professional services.
Cloud, Backup, and Professional services revenue sky rocketed with the introduction of VES Wireless. Prior to the change, Verizon Wireless account managers would introduce third party partners during a sales deal without consulting with their counterparts at Verizon communications to see if a particular solution was available. Now under VES, wireless reporting to the same leadership encourages a VES Wireless Account Manager to put together joint account strategy sessions that include individuals from all business segments.
In addition to product/service integration, the new VES Wireless/Wireline will allow Verizon to more competitive during contract negotiations by leveraging customer spend and opportunities across all business segments under Verizon Communications. An example would be a customer that has a $1 million annual spend with Wireline, and $2K spend with Wireless. In the past, wireless contracts would be structured with only wireless in mind, making pricing more expensive and less competitive. Now with the introduction of VES Wireless, contracts are being put together with all business opportunities in mind, allowing Verizon to cross-sell like never before.
Human Resource VES Wireless
For now, the HR structure will stay intact as Verizon leadership figures out how to further streamline the business. Integration of Wireless into VES has been slowly developing with the announcement of the Vodafone buyout. Today, Verizon Wireless employees in VES report to both companies – Verizon Wireless and Verizon Communications. Resources, knowledge, and experience are some of the reasons why the Human Resource Organization has been kept intact. The buyout of Vodafone’s shares will eventually result in full integration, however, at this time Verizon Wireless still has the resources required to maintain and drive customer relationships. Customers who are part of VES have two primary account managers with one focusing on Wireless and the other Wireline. The VES Wireless account manager works with regional contacts within Verizon Wireless to help drive sales strategies and initiatives locally.
Verizon Communications now has 100% ownership of the most profitable piece of their business – Wireless. This will change Verizon’s business strategy going forward, by allowing all business segments to cross-communicate, leverage opportunities, and address customer challenges like never before.
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2. No Author (2014, May). http://www.verizonwireless.com/?cmp=KNC-58700000262425261
3. No Author (2014, May). http://www.bloomberg.com/quote/VZ:US
4. Varettoni, Bob (2014, Feb 21). Verizon Completes Acquistion of Vodafones’s 45 percent Indirect Interest in Verizon Wireless http://newscenter.verizon.com/corporate/news-articles/2014/02-21-acquisition-of-vodafone-stake-in-vzw-complete/
5. Mick, Jason (2014, Feb 28). Now That It’s Done, Who Profits Off the Vodafone/Verizon Deal. http://www.dailytech.com/Now+That+Its+Done+Who+Profits+Off+the+VodafoneVerizon+Deal/article34382.htm